China imports record volume of iron ore in March
April 17, 2009
April 14 (Xinhua) — China’s steel industry overestimated the country’s demand for iron ore and as a result imported a record high amount of the material in March.
A surge of domestic steel output and price increases in the beginning of 2009 raised market expectations. Many domestic steel mills and traders increased orders for iron ore in February and March as they anticipated demand would continue growing, said Liang Shuhe, deputy-director with the Foreign Trade Department of the Ministry of Commerce (MOC), at an industry conference in the port city of Tianjin Monday.
China’s iron ore imports topped 52.08 million tonnes in March, setting a monthly record high. It beat the last record which was just set in February. That’s when the country imported 46.74 million tonnes of iron ore.
In the first quarter, China imported a total of 130 million tonnes of iron ore. In 2008, iron ore imports totaled 440 million tonnes.
“The imports in March mostly came from orders made in February. Iron ore was priced at 80 U.S. dollars a tonne then, but dwindled to 60 U.S. dollars a tonne now. It means huge unrealized losses for steel mills and traders who betted on price hikes,” said Du Wei, an analyst on iron ore with Umetal.com.
Those unrealized losses for the 52.08 million tonnes of iron ore imported in March could be about 1 billion U.S. dollars, Du said.
Liang said iron ore prices were hinged to steel prices.
“Domestic steel prices have dropped and will further dwindle. Thus it’s inevitable for iron ore prices to go down,” Liang said.
Iron ore stockpiled at ports stood at 70 million tonnes in March, nearing a historic high, according to anonymous sources within the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters.
Due to declining iron ore prices, an increasing number of domestic iron ore mines are closing down, said Zhang Ye, deputy-general-manager of China National Minerals Co., Ltd.. No specific figures were available.
“About 90 percent of China’s iron ore mines are suffering from losses,” Du said. “Steel is a kind of product that could be recycled and thus its scarcity could not be exacerbated in the long term.”
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Chinese steel price recovery may be short lived
February 7, 2009
China Securities Journal reported that market participants are concerned that recent steel price recovery may be short lived since the real steel demand remains slack, although the price rally has extended for ten straight weeks supported by stimulus package and production cut.
As many mills have restarted production in light of price improvement, maybe an overreaction by speculative buyers, which would again put the steel price under downward pressure.
The demand plunge has yet to reverse, and recent price recovery is the result of larger scale of production cut than the demand reduction, which has restored the market balance for the short term. However, the construction activity especially housing market continues to shrink, while many companies have slashed the capital spending significantly for the New Year, which would all suppress the steel demand.
Mr Matao Bohai Securities analyst said down-stream demand may not be that healthy as indicated by the rebounding steel prices. Leading mills have raised up the offer price around Jan in response to the price improvement and they are eager to offset the heavy loss in past months. Meanwhile, trading houses are more willing to restock at the moment. Nevertheless, most are more bearish on long products outlook on back of limited capacity addition and infrastructure oriented stimulus package.
The stimulus package is expected to provide a real demand boost for long products. Therefore, long products price is estimated to held steady or edge upward in days to come.
The steel output grows 15.4% from the month before in December of this, long products output expands 21.8%, while flat products production merely rises 9.97%. Market insiders warn that swelling supply of long products could weigh on prices downward since most sheet producers can readily switch to longs production.
Source: China Securities Journal
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Weak Economy Cuts China’s Ansteel 2008 Net Profit 55%
January 31, 2009
China’s Angang Steel Co. Ltd. (Ansteel) said Wednesday net profit fell 55 percent last year to an estimated 3.42 billion yuan (about US$500 million) Ansteel prices plunged.
Ansteel, one of the country’s top three steel producers, issued the estimate in an unaudited statement to the Shenzhen Stock Exchange, where it is listed.
The final figure indicates a loss of 4.83 billion yuan in the fourth quarter, as previous company data show net profits in the first three quarters totaled 8.25 billion yuan.
The decline reflected steep falls in steel prices and slow inventory movement starting in the second half, said the northeast-based company.
Steel prices in China plummeted in the second half as the deepening world economic slowdown weakened industrial growth and steel demand in the country.
The price of 6.5 mm carbon steel wire rods, a major steel product, was down more than 40 percent since June, Jia Yinsong, a Ministry of Industry and Information Technology official, told a forum earlier in January. Market data show the product was sold at about 3,400 yuan per ton.
The company also attributed the weak performance to the costs of buying raw materials and fuel at high prices earlier in 2008.
World crude oil prices are down more than 70 percent since peaking at 147 U.S. dollars per barrel in July. Earnings per share were estimated at 0.47 yuan in 2008, down 58 percent from in 2007, Ansteel said.
The company didn’t give a date for the release of its audited results, which under Chinese rules must be done within six months.
Source: Xinhua News Agency
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48 Major Steel Mills in The Red
January 2, 2009
About two thirds of China’s major steel mills were in the red in November, suffering from high prices in raw materials and the decreasing prices of steel products.
Forty-eight out of 71 large and medium-sized domestic steelmakers saw a loss in November (six more than in October), with total losses for the month in the neighborhood of 12.77 billion yuan, China Securities Journal reported yesterday citing anonymous sources.
Analysts largely contributed the loss to high iron ore prices and dropping steel prices, and they remained pessimistic for the mills’ performance in December.
Chinese steelmakers agreed to pay a record of $92 per ton for iron ore in the 2008 long-term contract, and steel prices have dropped about 40 percent since June as a result of the global financial crisis.
Authorities are considering measures including buying some steel products for reserves to help the industry through the rough time, Minister of Industry and Information Technology Li Yizhong recently said in Beijing.
Reports said the government would likely spend 10-15 billion yuan to establish a reserve of 3-5 million tons.
Some major steelmakers have increased steel prices on the news.
Angang Steel will raise the price of hot rolling steel by 350 yuan per ton from January; Shougang Group will rise by 300 yuan per ton and China’s largest steelmaker Baosteel will also raise product prices by 6 to 10 percent from February.
Analysts said building up stocks may provide some support to prices in the short term, but the policy could also mean producers take longer to emerge from the current slump in demand with a U-shaped recovery rather than a V-shaped bounce, since the government stocks may return to the market as prices recover.
The government could also increase export tax rebates on high-end steel products and will encourage industry reshuffling as well as innovation.
Source: China Steel Net.com
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